Estate planning can be an uncomfortable subject, but it’s an important aspect of wealth management that too many people neglect. Unfortunately, failing to create a plan to dispose of your assets after you are gone can leave your loved ones in a difficult position. They may be unable to claim what you wanted to be theirs or may fight among each other. Taking the steps to make your estate plan now when it’s easy can save your loved ones trouble further down the road. If you are interested to find out more, do look at this website for more details about estate planning.
What is Estate Planning?
Many people confuse estate planning with writing a will because they both involve creating a plan to distribute your assets after you have passed. However, estate planning is much more detailed and complicated, and it is necessary for wealthier individuals. Failing to create an estate pan can lead to long legal battles. It may also saddle your beneficiaries with a higher tax burden that they could have avoided.
In 2019, the IRS announced higher estate and gift tax limits. Now, in 2020, the estate tax exemption for 2020 is $11.58 million for individuals, which may be transferred to a spouse if their partner has already died. This means that estates that are worth more than this amount may be subjected to additional federal taxes. Additionally, 17 states and the District of Columbia have also levied additional taxes on estates. With an estate plan, your beneficiaries can potentially avoid many, if not all, of these taxes.
At What Age Should I Begin Estate Planning?
The fact is there’s never a set time by which you should begin estate planning, but the earlier you do so, the better. However, some people begin to think of estate planning after they have a major life event, such as a marriage or after the birth of their first child. Unfortunately, many people continue to put off estate planning for years, with some not even leaving a will. The good news is that you can begin creating your plan at any time.
Here are some milestones by decade of your life that you can use to build your own estate plan.
- Your 20s: Create a Healthcare Directive to outline what treatment you want if you cannot decide for yourself. Also designate someone in your life with the Power of Attorney who can make decisions for you if you die or are incapacitated.
- Your 30s: Create a will to decide who will receive your assets and a trust to designate someone to manage them.
- Your 40s: Speak with your parents about their plans, both for their own estate and the type of long-term care they may wish to receive.
- Your 50s and 60s: Catch up on these documents if you haven’t created them already.
- Your 70s: Make updates to your estate plan.
If you haven’t created an estate plan already, you can always create one now. What matters is that you have one in place more than the age at which you created it.
How Do I Create An Estate Plan?
The first step to creating an estate plan is speaking with an attorney that has experience in this field. They can walk you through the steps that are necessary to create a legally-binding document that will be used to dispose of your assets should you die or become incapacitated. Doing this while you are in full possession of your faculties can help to prevent anyone from disputing it later on. You’ll also have time to amend it and make changes as you see fit and have more time to think about it.
Want to get started on creating your own plan for the future? You can follow this link for more estate plan information.
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